11 U.S.C. § 707 : US Code - Section 707: Dismissal of a case or conversion to a case under chapter 11 or 13

Search 11 U.S.C. § 707 : US Code - Section 707: Dismissal of a case or conversion to a case under chapter 11 or 13

(a) The court may dismiss a case under this chapter only after
notice and a hearing and only for cause, including -
(1) unreasonable delay by the debtor that is prejudicial to
creditors;
(2) nonpayment of any fees or charges required under chapter
123 of title 28; and
(3) failure of the debtor in a voluntary case to file, within
fifteen days or such additional time as the court may allow after
the filing of the petition commencing such case, the information
required by paragraph (1) of section 521(a), but only on a motion
by the United States trustee.
(b)(1) After notice and a hearing, the court, on its own motion
or on a motion by the United States trustee, trustee (or bankruptcy
administrator, if any), or any party in interest, may dismiss a
case filed by an individual debtor under this chapter whose debts
are primarily consumer debts, or, with the debtor's consent,
convert such a case to a case under chapter 11 or 13 of this title,
if it finds that the granting of relief would be an abuse of the
provisions of this chapter. In making a determination whether to
dismiss a case under this section, the court may not take into
consideration whether a debtor has made, or continues to make,
charitable contributions (that meet the definition of "charitable
contribution" under section 548(d)(3)) to any qualified religious
or charitable entity or organization (as that term is defined in
section 548(d)(4)).
(2)(A)(i) In considering under paragraph (1) whether the granting
of relief would be an abuse of the provisions of this chapter, the
court shall presume abuse exists if the debtor's current monthly
income reduced by the amounts determined under clauses (ii), (iii),
and (iv), and multiplied by 60 is not less than the lesser of -
(I) 25 percent of the debtor's nonpriority unsecured claims in
the case, or $6,000, whichever is greater; or
(II) $10,000.
(ii)(I) The debtor's monthly expenses shall be the debtor's
applicable monthly expense amounts specified under the National
Standards and Local Standards, and the debtor's actual monthly
expenses for the categories specified as Other Necessary Expenses
issued by the Internal Revenue Service for the area in which the
debtor resides, as in effect on the date of the order for relief,
for the debtor, the dependents of the debtor, and the spouse of the
debtor in a joint case, if the spouse is not otherwise a dependent.
Such expenses shall include reasonably necessary health insurance,
disability insurance, and health savings account expenses for the
debtor, the spouse of the debtor, or the dependents of the debtor.
Notwithstanding any other provision of this clause, the monthly
expenses of the debtor shall not include any payments for debts. In
addition, the debtor's monthly expenses shall include the debtor's
reasonably necessary expenses incurred to maintain the safety of
the debtor and the family of the debtor from family violence as
identified under section 302 of the Family Violence Prevention and
Services Act, or other applicable Federal law. The expenses
included in the debtor's monthly expenses described in the
preceding sentence shall be kept confidential by the court. In
addition, if it is demonstrated that it is reasonable and
necessary, the debtor's monthly expenses may also include an
additional allowance for food and clothing of up to 5 percent of
the food and clothing categories as specified by the National
Standards issued by the Internal Revenue Service.
(II) In addition, the debtor's monthly expenses may include, if
applicable, the continuation of actual expenses paid by the debtor
that are reasonable and necessary for care and support of an
elderly, chronically ill, or disabled household member or member of
the debtor's immediate family (including parents, grandparents,
siblings, children, and grandchildren of the debtor, the dependents
of the debtor, and the spouse of the debtor in a joint case who is
not a dependent) and who is unable to pay for such reasonable and
necessary expenses.
(III) In addition, for a debtor eligible for chapter 13, the
debtor's monthly expenses may include the actual administrative
expenses of administering a chapter 13 plan for the district in
which the debtor resides, up to an amount of 10 percent of the
projected plan payments, as determined under schedules issued by
the Executive Office for United States Trustees.
(IV) In addition, the debtor's monthly expenses may include the
actual expenses for each dependent child less than 18 years of age,
not to exceed $1,500 per year per child, to attend a private or
public elementary or secondary school if the debtor provides
documentation of such expenses and a detailed explanation of why
such expenses are reasonable and necessary, and why such expenses
are not already accounted for in the National Standards, Local
Standards, or Other Necessary Expenses referred to in subclause
(I).
(V) In addition, the debtor's monthly expenses may include an
allowance for housing and utilities, in excess of the allowance
specified by the Local Standards for housing and utilities issued
by the Internal Revenue Service, based on the actual expenses for
home energy costs if the debtor provides documentation of such
actual expenses and demonstrates that such actual expenses are
reasonable and necessary.
(iii) The debtor's average monthly payments on account of secured
debts shall be calculated as the sum of -
(I) the total of all amounts scheduled as contractually due to
secured creditors in each month of the 60 months following the
date of the filing of the petition; and
(II) any additional payments to secured creditors necessary for
the debtor, in filing a plan under chapter 13 of this title, to
maintain possession of the debtor's primary residence, motor
vehicle, or other property necessary for the support of the
debtor and the debtor's dependents, that serves as collateral for
secured debts;
divided by 60.
(iv) The debtor's expenses for payment of all priority claims
(including priority child support and alimony claims) shall be
calculated as the total amount of debts entitled to priority,
divided by 60.
(B)(i) In any proceeding brought under this subsection, the
presumption of abuse may only be rebutted by demonstrating special
circumstances, such as a serious medical condition or a call or
order to active duty in the Armed Forces, to the extent such
special circumstances that justify additional expenses or
adjustments of current monthly income for which there is no
reasonable alternative.
(ii) In order to establish special circumstances, the debtor
shall be required to itemize each additional expense or adjustment
of income and to provide -
(I) documentation for such expense or adjustment to income; and
(II) a detailed explanation of the special circumstances that
make such expenses or adjustment to income necessary and
reasonable.
(iii) The debtor shall attest under oath to the accuracy of any
information provided to demonstrate that additional expenses or
adjustments to income are required.
(iv) The presumption of abuse may only be rebutted if the
additional expenses or adjustments to income referred to in clause
(i) cause the product of the debtor's current monthly income
reduced by the amounts determined under clauses (ii), (iii), and
(iv) of subparagraph (A) when multiplied by 60 to be less than the
lesser of -
(I) 25 percent of the debtor's nonpriority unsecured claims, or
$6,000, whichever is greater; or
(II) $10,000.
(C) As part of the schedule of current income and expenditures
required under section 521, the debtor shall include a statement of
the debtor's current monthly income, and the calculations that
determine whether a presumption arises under subparagraph (A)(i),
that show how each such amount is calculated.
(D) Subparagraphs (A) through (C) shall not apply, and the court
may not dismiss or convert a case based on any form of means
testing -
(i) if the debtor is a disabled veteran (as defined in section
3741(1) of title 38), and the indebtedness occurred primarily
during a period during which he or she was -
(I) on active duty (as defined in section 101(d)(1) of title
10); or
(II) performing a homeland defense activity (as defined in
section 901(1) of title 32); or
(ii) with respect to the debtor, while the debtor is -
(I) on, and during the 540-day period beginning immediately
after the debtor is released from, a period of active duty (as
defined in section 101(d)(1) of title 10) of not less than 90
days; or
(II) performing, and during the 540-day period beginning
immediately after the debtor is no longer performing, a
homeland defense activity (as defined in section 901(1) of
title 32) performed for a period of not less than 90 days;
if after September 11, 2001, the debtor while a member of a
reserve component of the Armed Forces or a member of the National
Guard, was called to such active duty or performed such homeland
defense activity.
(3) In considering under paragraph (1) whether the granting of
relief would be an abuse of the provisions of this chapter in a
case in which the presumption in paragraph (2)(A)(i) does not arise
or is rebutted, the court shall consider -
(A) whether the debtor filed the petition in bad faith; or
(B) the totality of the circumstances (including whether the
debtor seeks to reject a personal services contract and the
financial need for such rejection as sought by the debtor) of the
debtor's financial situation demonstrates abuse.
(4)(A) The court, on its own initiative or on the motion of a
party in interest, in accordance with the procedures described in
rule 9011 of the Federal Rules of Bankruptcy Procedure, may order
the attorney for the debtor to reimburse the trustee for all
reasonable costs in prosecuting a motion filed under section
707(b), including reasonable attorneys' fees, if -
(i) a trustee files a motion for dismissal or conversion under
this subsection; and
(ii) the court -
(I) grants such motion; and
(II) finds that the action of the attorney for the debtor in
filing a case under this chapter violated rule 9011 of the
Federal Rules of Bankruptcy Procedure.
(B) If the court finds that the attorney for the debtor violated
rule 9011 of the Federal Rules of Bankruptcy Procedure, the court,
on its own initiative or on the motion of a party in interest, in
accordance with such procedures, may order -
(i) the assessment of an appropriate civil penalty against the
attorney for the debtor; and
(ii) the payment of such civil penalty to the trustee, the
United States trustee (or the bankruptcy administrator, if any).
(C) The signature of an attorney on a petition, pleading, or
written motion shall constitute a certification that the attorney
has -
(i) performed a reasonable investigation into the circumstances
that gave rise to the petition, pleading, or written motion; and
(ii) determined that the petition, pleading, or written motion -
(I) is well grounded in fact; and
(II) is warranted by existing law or a good faith argument
for the extension, modification, or reversal of existing law
and does not constitute an abuse under paragraph (1).
(D) The signature of an attorney on the petition shall constitute
a certification that the attorney has no knowledge after an inquiry
that the information in the schedules filed with such petition is
incorrect.
(5)(A) Except as provided in subparagraph (B) and subject to
paragraph (6), the court, on its own initiative or on the motion of
a party in interest, in accordance with the procedures described in
rule 9011 of the Federal Rules of Bankruptcy Procedure, may award a
debtor all reasonable costs (including reasonable attorneys' fees)
in contesting a motion filed by a party in interest (other than a
trustee or United States trustee (or bankruptcy administrator, if
any)) under this subsection if -
(i) the court does not grant the motion; and
(ii) the court finds that -
(I) the position of the party that filed the motion violated
rule 9011 of the Federal Rules of Bankruptcy Procedure; or
(II) the attorney (if any) who filed the motion did not
comply with the requirements of clauses (i) and (ii) of
paragraph (4)(C), and the motion was made solely for the
purpose of coercing a debtor into waiving a right guaranteed to
the debtor under this title.
(B) A small business that has a claim of an aggregate amount less
than $1,000 shall not be subject to subparagraph (A)(ii)(I).
(C) For purposes of this paragraph -
(i) the term "small business" means an unincorporated business,
partnership, corporation, association, or organization that -
(I) has fewer than 25 full-time employees as determined on
the date on which the motion is filed; and
(II) is engaged in commercial or business activity; and
(ii) the number of employees of a wholly owned subsidiary of a
corporation includes the employees of -
(I) a parent corporation; and
(II) any other subsidiary corporation of the parent
corporation.
(6) Only the judge or United States trustee (or bankruptcy
administrator, if any) may file a motion under section 707(b), if
the current monthly income of the debtor, or in a joint case, the
debtor and the debtor's spouse, as of the date of the order for
relief, when multiplied by 12, is equal to or less than -
(A) in the case of a debtor in a household of 1 person, the
median family income of the applicable State for 1 earner;
(B) in the case of a debtor in a household of 2, 3, or 4
individuals, the highest median family income of the applicable
State for a family of the same number or fewer individuals; or
(C) in the case of a debtor in a household exceeding 4
individuals, the highest median family income of the applicable
State for a family of 4 or fewer individuals, plus $525 per month
for each individual in excess of 4.
(7)(A) No judge, United States trustee (or bankruptcy
administrator, if any), trustee, or other party in interest may
file a motion under paragraph (2) if the current monthly income of
the debtor, including a veteran (as that term is defined in section
101 of title 38), and the debtor's spouse combined, as of the date
of the order for relief when multiplied by 12, is equal to or less
than -
(i) in the case of a debtor in a household of 1 person, the
median family income of the applicable State for 1 earner;
(ii) in the case of a debtor in a household of 2, 3, or 4
individuals, the highest median family income of the applicable
State for a family of the same number or fewer individuals; or
(iii) in the case of a debtor in a household exceeding 4
individuals, the highest median family income of the applicable
State for a family of 4 or fewer individuals, plus $525 per month
for each individual in excess of 4.
(B) In a case that is not a joint case, current monthly income of
the debtor's spouse shall not be considered for purposes of
subparagraph (A) if -
(i)(I) the debtor and the debtor's spouse are separated under
applicable nonbankruptcy law; or
(II) the debtor and the debtor's spouse are living separate and
apart, other than for the purpose of evading subparagraph (A);
and
(ii) the debtor files a statement under penalty of perjury -
(I) specifying that the debtor meets the requirement of
subclause (I) or (II) of clause (i); and
(II) disclosing the aggregate, or best estimate of the
aggregate, amount of any cash or money payments received from
the debtor's spouse attributed to the debtor's current monthly
income.
(c)(1) In this subsection -
(A) the term "crime of violence" has the meaning given such
term in section 16 of title 18; and
(B) the term "drug trafficking crime" has the meaning given
such term in section 924(c)(2) of title 18.
(2) Except as provided in paragraph (3), after notice and a
hearing, the court, on a motion by the victim of a crime of
violence or a drug trafficking crime, may when it is in the best
interest of the victim dismiss a voluntary case filed under this
chapter by a debtor who is an individual if such individual was
convicted of such crime.
(3) The court may not dismiss a case under paragraph (2) if the
debtor establishes by a preponderance of the evidence that the
filing of a case under this chapter is necessary to satisfy a claim
for a domestic support obligation.